• Consternation For Davies
• Poland's Statistical Nightmare
• "EURA" Zone - Eurasian Governors Optimistic on Currency Union
• Comic Currency Battle
• Berlusconi Talks Lira
• More Euro-Wrangling
• RBNZ Bomb Scare Caused By Alarm
• "Think Before You Borrow, Says Boring Banker"
• World Bank President Gets A Splattering
• New Home For Bank Of Mauritius

CONSTERNATION FOR DAVIES

Shocks to the system are hardly a novelty for Sir Howard Davies - after all, he has devoted a great deal of his professional life to eliminating them. However, placard-bearing students are an altogether new kind of challenge for Britain's former top financial regulator. Instead of giving them a lesson in risk management he had to succumb to pressure and pass up a seat on the board at French oil group Total after students at the London School of Economics, where he is the big chief, objected to their director taking a post in a company that is the largest remaining investor in Junta-run Burma, renowned for its human rights abuses.

On announcement of his decision to turn down the role Davies declared: "I make no personal criticism of the company's investment in Burma," explaining however: "I recognise that the issue is one on which there are strong feelings within the school community."

Accepting the job would be too risky: it would "generate continued controversy which would be unfortunate for both the school and the company."

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POLAND'S STATISTICAL NIGHTMARE

After the Eurostat ruling that obligatory contributions to pension funds operating outside state-run security institutions cannot be included as part of public finances, the Polish entry date into the eurozone has been thrown into doubt. The Eurostat decision means that Poland's official budget deficit will swell by 1.5 percentage points of GDP, making it that much harder to reach the debt threshold for euro-entry.

Leszek Balcerowicz, president of the National Bank of Poland, did not rule out a delay to euro-entry in his non-committal reply to questioning on the matter, saying: "It would not be possible to deny (a delayed entry) in response to such a speculative question."

The government plans to join the eurozone in 2009 and the Monetary Policy Council of the national bank is urging adoption of the euro as early as possible. But first the new EU members like Poland still have to prove their convergence credentials by joining ERM2 - though the ECB is coming in for a lot of criticism for insisting they go through all these hoops that were designed for the original members all those years ago and, many say, are no longer appropriate.

Though uncomfortable when they bite, the rules of the stability and growth pact do give accession-country central bankers new ammunition to aim at governments and finance ministers who refuse to put public finances in order.

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"EURA" ZONE - EURASIAN GOVERNORS OPTIMISTIC ON CURRENCY UNION

The euro is not the only currency set to go forth and multiply in coming years; the Russian rouble also looks set for wider circulation. Both the chairmen of the Central Bank of Russia, Sergey Ignatyev, and the National Bank of Belarus, Petr Prokopovich, were upbeat on the prospect of the adoption of the rouble in Belarus at a meeting of the Eurasian Economic Community council of central bankers held in Minsk. The rouble is set to become legal tender in Belarus on January 1 2005.

Ignatyev told journalists: "There are no serious problems left between the banks. We are prepared. There exist certain problems at government level. They primarily relate to the budget…. I hope that this process will be completed in the coming weeks."

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COMIC CURRENCY BATTLES

The Japanese sense of humour never fails to surprise. While comic books in other parts stick to slapstick or classroom antics, in Japan comic-book fiction is becoming intertwined with financial diplomacy - of sorts.

Politicians have traditionally been susceptible to cynical one-liners in smug cartoons, but "Golgo 13" takes this to an entirely new level. Officials in Washington, one of whom bears more than a passing resemblance to Condoleezza Rice, make an appearance a recent issue of the comic strip - as orchestrating a sinister plot to rescue the US dollar at Japan's expense.

The conventional rationale for the vast sum that has recently been spent by the Japanese on US dollars is that authorities fear a soaring yen hitting Japanese industry. Not so, according to Golgo 13. This spree is part of a White House conspiracy to force Tokyo to finance massive US budget deficits without making US Treasuries crash.

Rather far-fetched? But it is selling well, even provoking a giggle from the Japanese finance minister, Sadakazu Tanigaki, who called it "an entertaining story".

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BERLUSCONI TALKS LIRA

Silvio Berlusconi has never shied from speaking his mind. Despite diplomatic denials that he is a "eurosceptic," the Italian prime minister cannot hide his displeasure regarding the euro, the adoption of which he pointedly remarked last December, "was not something decided upon by this government".

In his latest euro-snub, Berlusconi has obstinately continued to talk about lira on official campaign posters for this year's EU elections. "Not very European, to tell the truth," commented La Repubblica, a centre-left Italian daily, about the campaign posters that boast the launch of a L93,000bn (€48bn) public works programme.

La Repubblica further notes that even in his six-month term as EU president, Berlusconi, never renowned for his tact, often spoke in terms of the lira over the legal tender.

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MORE EURO-WRANGLING

The euro is not the only thing Berlusconi is keeping quiet about. He has announced that he has an "exceptional" candidate to head to the IMF, but refused to give a name. With Rodrido Rato and Jean Lemierre both seen as strong contenders, Berlusconi may have to identify his anonymous contender soon for the rest of Europe to appreciate these exceptional qualities.

Meanwhile Joaqún Almunia will take over as the EU's economics and monetary affairs commissioner from Pedro Solbes, who is returning to Spain to take up his new post as finance minister. Almunia will hold the role until November, when the new European Commission will be installed.

Solbes, however, may not find his future colleagues the most amicable. He recently joined the gang at a dinner in the finance ministers' Ecofin club. Among fellow diners were Francis Mer of France and Hans Eichel of Germany, with whom Solbes clashed when ardently pursuing the stability pact budget deficit rules during his time in the commission.

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RBNZ BOMB SCARE CAUSED BY ALARM

The Reserve Bank of New Zealand has not escaped rising worldwide terrorist fears. The whole building was evacuated after a ticking parcel was found on the 10th floor, the home of the Ministry of Research, Science and Technology.

The entire building was emptied as the army bomb-squad hot-footed it to Wellington. Occupiers of neighbouring buildings were asked to move back from the windows as cordoning-tape was brought out.

On this occasion, fortunately, the precautions were unnecessary. The parcel contained an alarm clock destined as a gift to a minister.

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"THINK BEFORE YOU BORROW, SAYS BORING BANKER"

The furore over consumer debt looks set to continue if a recent exchange between the government and the Bank of England is anything to go by.

A day after Sir Andrew Large, a deputy governor at the Bank, cautioned bleakly that should interest rates rise as high as the market has predicted, consumers may struggle to service their debts, Gordon Brown, the chancellor, retorted: "It is not true that the economy is in a parlous position."

As Large called the debt burden a "credible threat" and even Eddie George, former governor of the Bank added his voice to the fray to say he was "concerned" by the situation, the government replied with a barrage of statistics. Brown pointed out that typical debt service repayments are about 7% of disposable income, compared with 15% in the late 1980s. Mortgage payments make up 15% of income now compared with 30% then.

However, comparisons with the late 1980s may not necessarily work in the government's favour. Mervyn King, the governor, has told the Treasury select committee that the rising debt-to-income ratios could soon reach the levels of the early 1990s when they were blamed for helping provoke the subsequent recession and house-price crash. King warned that history may repeat itself if interest rates rise and debt levels stay the same in the next few years. Considering King's strong suggestion that interest rates will rise in line with the market expectation, that reads as a fairly grim prediction.

But the committee was not entirely humourless. King unveiled a surprising new talent when asked by an MP to give a newspaper headline that would summarise the approach that should be taken to consumer debt. His self-deprecating reply was: "Think before you borrow, says boring banker."

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WORLD BANK PRESIDENT GETS A SPLATTERING

James Wolfensohn, president of the World Bank, received a rather messy welcome to Slovenia while in the captial promoting the launch of a book on the country by the World Bank. Wolfensohn and Dusan Mramor, Slovenian finance minister, were on their way to a presentation when ambushed by group of around ten anti-globalisation demonstrators who pelted them with green paint.

After some delay, Wolfensohn arrived at Slovenia's main cultural centre with a definite tinge of green in his white hair, accompanied by Slovenian prime minister Anton Rop.

Fortunately Rop saw the incident as evidence of his country's thriving democracy, saying: "Such things can happen. This is proof that we are in a democracy; we have anti-globalists as well."

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NEW HOME FOR BANK OF MAURITIUS

The Bank of Mauritius is following hot on the heels of the ECB in commissioning the construction of a new headquarters in the capital, Port Louis.

The new building will not quite rival the planned ECB, but will be 20 storeys high and rise above a podium, ensuring a place among the landmarks of Port Louis.

The Bank of Mauritius was established in September 1967 and the organisation is modelled on the Bank of England.

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